Feed Wheat Retreats to £120.00/T

Old crop feed wheat values have continued to decline this week as currency fluctuations add further pressure to local ex-farm prices.

Feed wheat for spot collection is currently valued in the region of £120.00/T – £123.00/T ex-farm, depending on farm location. Local ex-farm values are now trading around £20.00/T lower than their pre-Christmas equivalent. Buyer demand is however very good and is allowing for rapid movement off the farm.

DEFRA have this week increased their forecast for Human and Industrial wheat usage in the UK this season by 182,000/T to a record 7.99 million tonnes. This is a 7.7% increase on last season’s use.

Increased demand from the bioethanol production industry is predominantly responsible for the increase, despite the current weaknesses within the bioethanol market itself. The percentage of home grown wheat used by UK millers is also good, despite the opportunity of competitively priced European alternatives.

In addition, this season’s exportable surplus figure was slightly decreased – but at 3.46 million tonnes this is still the largest figure since 2008.

For those of you with milling wheat still left in the shed, premiums for full specification group 1 varieties are unchanged at £45.00/T – £50.00/T over the feed wheat base; £170.00/T ex-farm currently looks like a realistic offer for March/April collection.

Demand for soft wheat, particularly full specification group 3 varieties has curbed and buyers are offering a £2.00 – £3.00/T premium over the feed wheat base.

The recent cold snap across much of central Europe is giving some cause for concern and although the weather is described as ‘seasonal’, an initially mild start to the winter months has left many crops in a good, but susceptible condition. A sudden switch to colder weather could make many crops vulnerable, particularly those in Germany and across Northern parts of France.

Regardless, the above has done little to persuade new crop feed wheat values higher and prices are generally unchanged this week. £125.00/T ex-farm currently looks like a realistic offer for September collection – for those of you looking to secure immediate movement off the farm at harvest values would be £2.00 – £3.00/T less.

OSR values have also declined this week, again due to the current strength of sterling against the euro. Spot collection is offered in the region of £245/T ex-farm and there is a small carry available for movement further forward.

There are on-going talks of ‘wet weather’ over in Brazil but market opinion is mixed – some are convinced that the hot and dry weather is to continue whilst others see more favourable conditions on the horizon.

Mato Grosso for example is Brazil’s top soybean producing state and is expected to be a significant contributor to this seasons 95 million tonne crop. Just half the expected amount of rainfall has fallen here over the last six weeks and forecasts for the next fortnight demonstrate little change.

Actual harvest progress here is however only 3% complete – it could be a couple of weeks yet before we have a clearer idea of this.